ACC Ltd’s stock has declined about 10% over the past year even as shares of many cement companies have gained. The Street is looking past the strong September quarter (Q2FY26) numbers and weighing the medium-term growth prospects, expected largely from how the Adani Group positions ACC.
As parent company Ambuja Cements Ltd steps up its integrated capacity much faster, ACC is relying more on traded volumes and group-level supply arrangements. Emkay Global Financial Services notes that over CY21-FY25, ACC’s cement capacity increased only about 4% while volumes rose 13%, implying that most of the sales growth was led by the master supply agreement between ACC and Ambuja.
Emkay expects about 7% capacity addition over FY25-28 without any clinker addition, reinforcing the shift toward supplied volumes rather than built capacity. ACC expects capacity to reach 43.7 million tonnes per annum by Q3FY26 and has outlined a 5.6 million tonne addition at $48 per tonne to be completed over the next 24 months.
Despite the sizeable growth plan, the Street will watch how ACC manages costs and keeps utilization healthy as fresh capacity is ramped up. With limited clinker capacity coming onstream, ACC could stay dependent on Ambuja—a structure that could cap its profit margin unless integrated additions are accelerated.
Cost passthrough and transfer pricing will determine how much ACC can make on each extra tonne.
Integration plans
“While execution of internal efficiency projects is still in early stages, we expect ACC’s operating performance to improve gradually over the next two years, in line with the management’s broader plans to consolidate operations under Ambuja Cements and achieve a consolidated cost target of ₹3,650/t by FY28E,” PL Capital said.
This integration, if implemented impartially, would ease investors’ concerns over ACC, it added.
Addressing investor concerns while announcing its Q2 results, ACC said it would keep shareholders informed about any developments regarding a potential Ambuja-ACC merger.
Working capital is another constraint. Intra-group receivables have risen sharply, tightening liquidity just when the company needs to push capex and sharpen costs. If this persists, ACC may have less flexibility to push capex aggressively, though the company expects the receivables-led stretch to reverse in Q3FY26.
A reset in working-capital discipline and a clearer push on integrated capacity over the next 12-18 months could shift sentiment favourably.
